Russia: Ford assumes control of Sollers joint venture

The second largest US automaker recently announced it would assume control over its Russian joint venture with local car producer Sollers and would further invest into the firm as it increases the provided financial support.

Russia has been going through an auto market meltdown brought by the dire economical situation of the country, with sales plunging after the economy was impacted by the recent political moves of the government. The plunge in the Russian auto market, once dubbed capable of surging past Germany’s rival market to Europe’s top position, made American competitor General Motors decide to essentially pull back from the country recently – dropping sales for the Opel brand and most of its Chevy models, as well as idling the plant it has in Russia. The Ford-Sollers partnership also incurred losses in 2014 – 5.5 billion rubles ($107 million), as the country’s local currency depreciation impacted both consumer confidence and profits. In 2014 the car deliveries in Russia recorded a massive drop after the ruble weakness was caused by the numerous Western nation sanctions over the implication in the Ukrainian crisis and the global oil glut. “Both partners will continue to work jointly by expanding its vehicle line-up to better meet the needs of Russian customers,” commented the move Ford in a statement.

The US carmaker assumed control of the joint venture by purchasing preferred shares in the venture and has pledged to bring additional funding for the business unit. Ford-Sollers, the company responsible in Russia for local production, sales and imports of Ford cars in the country, has the Ford equity stake at 50 percent and the American company has the future rights to completely take Sollers out of the venture.